The game of monopoly and anti-monopoly
- By Mei Xinyu
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Legal Definition
The Anti-Monopoly Law of the People's Republic of China identifies three types of monopolistic behavior: monopolistic agreements between entities, abuse of dominant market position by entities, and concentration of entities that may eliminate or restrict competition.
Common practices of monopoly include:
Price fixing: Competitors agree to maintain the price of products or services at a certain level by reaching price agreements or restricting the output or sales of products. (A case in point for the latter is the Organization of Petroleum Exporting Countries' imposition of oil production quotas on its members.)
Collusive tendering: Product and service suppliers fix the minimum price in bidding for a project.
Market division: Competitors reach a consensus to divide up their sales market by targeting different sets of customers and differentiating their product ranges in a complementary fashion.
Joint boycott: A number of enterprises take concerted actions, in order to eliminate competition and seize a monopoly advantage.
Fixing resale prices: Business operators restrict the price for reselling to a third party when supplying products to other business operators.
Predatory pricing: Enterprises sell products below cost price, in order to squeeze other competitors out of business and then monopolize the market.
Price discrimination: Enterprises sell products at a lower price in a certain region, in order to squeeze other competitors out of business, or unjustifiably apply discriminatory treatment in pricing when selling to parties with whom they have equal standing.
Exclusive dealing: Manufacturers require parties to conduct transactions exclusively with them.
Bundle sales: Manufacturers implement tie-in sales. (An example of such is Microsoft's bundle sale of its Windows systems and Internet Explorer.)
Restricting resale price: Manufacturers require parties that buy their products to sell them above a certain price.
The author is an op-ed contributor to Beijing Review and a researcher with the Chinese Academy of International Trade and Economic Cooperation
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